Evaporated 350 billion! Zijin Mining, stunned by the drop

Sharp-Eyed Brother

Lately, gold and silver have really been crashing hard.

Gold plummeted, and gold stocks also took a big hit.

Since late February and early March, the outbreak of war in the Middle East has seriously disrupted global financial and commodity markets.

Gold, traditionally seen as a safe-haven asset, has been falling nonstop recently. Last night, gold/USD once dropped by 6%, briefly falling near $4,500.

Silver/USD, which is even more volatile than gold, fell over 11% yesterday, nearly halving from its highest point this year.

Remember the Guotou Silver LOF, once soaring with premiums sky-high and wildly popular among retail investors? Since March, it’s been falling almost every day, nearly halving from its late January peak.

Since late January, when gold and silver prices sharply declined from their highs, gold stocks have basically peaked.

Take Zijin Mining, the largest resource stock by market cap in A-shares. Its stock hit a record high of 44.94 yuan on January 29, but now it’s at 31.65 yuan, nearly 30% down in less than two months.

At its peak, Zijin Mining’s market cap approached 1.2 trillion yuan, but now it’s around 840 billion yuan, evaporating over 350 billion yuan.

Other metal resource stocks are roughly in the same boat. Luoyang Molybdenum’s stock fell from 28.78 yuan to 17.55 yuan, a nearly 40% drop; China Aluminum dropped from 15.85 yuan to 11.53 yuan, over 27% decline; Jiangxi Copper fell from 70.7 yuan to 45 yuan, down more than 36%.

In fact, these metal resource stocks peaked in late January along with international gold prices, then saw a rebound in February, but since early March, they’ve been in a steady decline, making investors very anxious.

Rising oil prices severely suppress gold prices

Since early March, Middle East tensions have escalated further. Many initially believed that geopolitical conflicts would boost gold’s safe-haven appeal, but this time is different—the war is happening in the Persian Gulf, the world’s most important oil-producing region. Oil facilities in the Middle East have been attacked, and the Strait of Hormuz is essentially blocked, causing a supply crunch that sent international oil prices soaring.

Brent crude oil rose from pre-war $70 to nearly $120, and remains around $103.

More importantly, there’s no sign of the Strait of Hormuz reopening. Market fears that prolonged high oil prices will push inflation in major global economies.

Rising oil prices signal inflation expectations, which in turn raise concerns that the Federal Reserve might stop cutting rates or even hike rates. Before the conflict, markets expected one or two rate cuts this year, but those expectations have largely faded.

As rate cut expectations cool, US Treasury yields and the dollar index have risen. The dollar index, which was around 96 at the end of January, has climbed close to 100 now. A stronger dollar makes US bonds and other interest-bearing assets more attractive, while gold, being a non-yielding asset, faces higher opportunity costs, leading to outflows from gold into dollars and US Treasuries.

Over the past few years, the big rally in gold stocks in A-shares was mainly driven not by safe-haven demand but by the liquidity flood caused by the Fed’s rate cuts.

For gold, the most important driver isn’t war or safe-haven demand, but the liquidity glut of the US dollar.

When war breaks out, people need water and food, not gold with poor liquidity. That’s why some agricultural stocks have recently risen—this is the logic.

Persistent high oil prices, fueling inflation expectations, are a big negative for gold. Rising oil prices are also bad for the stock market, and gold stocks happen to be caught in this “double whammy.”

From “double hit” to “double kill”: Is the fundamental outlook for gold reversing?

By 2025, benefiting from rising prices, gold stocks and other metal resource stocks are expected to perform explosively.

For example, Zijin Mining is projected to achieve a net profit attributable to shareholders of 51-52 billion yuan in 2025, up 59-62% year-over-year; Chifeng Gold expects 3-3.2 billion yuan, up 70-81%; Huayou Cobalt expects 5.85-6.45 billion yuan, up 40.8-55.2%.

In January 2026, gold and silver experienced an epic surge: gold jumped from $4,300 to $5,600, silver from $71 to $121. Metal stocks, especially small-cap gold and silver stocks, also soared in January.

A typical example is Silver Mountain (Silver Yise), often mistaken as a silver stock but mainly engaged in cathode copper. Its name comes from its location in Baiyin, Gansu Province. In January, its stock price skyrocketed from below 6 yuan to over 15 yuan, a gain of more than 150%.

Because gold and silver prices accelerated to new highs in January, their stocks likely reported very strong earnings for that month.

But markets always trade on future expectations, not past performance. On January 30, gold and silver prices crashed dramatically, wiping out many leveraged speculators’ wealth. This massive, high-level plunge is often a sign of a major top, indicating that many long positions at lower levels are being sold off.

Metal stocks are heavily influenced by gold and silver futures prices. The clear top signals in futures markets caused significant volatility in metal stocks.

On January 29, Zijin Mining’s price fluctuation exceeded 8%, with a trading volume of 33.3 billion yuan, a record high; Luoyang Molybdenum’s fluctuation exceeded 12%, with 17.7 billion yuan traded; Jiangxi Copper’s fluctuation exceeded 15%, with 11.3 billion yuan traded—all hitting record highs.

Investors familiar with technical analysis and volume-price structures should recognize that such movements greatly increase the likelihood of a short- or medium-term top.

Before January, gold stocks experienced a “Davis double play,” rising with gold resource prices and driven by earnings expectations.

After the sharp drop in international gold prices at the end of January, the logic supporting gold stocks was shaken. Since March, the surge in oil prices caused by Middle East conflicts has further undermined the previously strong upward logic for gold, instead reinforcing the downward trend.

High-level gold stocks have shifted from “Davis double play” to “Davis double kill” in just over a month. As a result, their decline far exceeds that of the broader market index.

Currently, international gold prices remain above $4,500, still in a relatively high zone historically. If this level can be maintained, gold stocks’ first-quarter earnings should still be decent.

The global market’s focus now is on oil prices, which are the biggest factor affecting gold and gold stocks.

How the Middle East situation develops and when the war ends are uncertain. But one thing is clear: once there are signs of an end, oil prices are likely to drop sharply—and the decline could be substantial. At that point, metal resource stocks led by gold stocks may have a rebound opportunity.